Misrepresentation

Question 1

Elements of a Misrepresentation claim

Answer 1

1) Statement addressed to an innocent party

2) Containing a false statement of fact or law

3) That induces the innocent party to enter the contract

NOTE: A “statement” here can be conduct, but it cannot be silence (e.g., if someone covers up a defect to a property)

Question 2

Is it still a misrepresentation if a statement was true at the time it was made, but becomes false once the contract is entered into?

Answer 2

Yes, if the maker of the statement does not correct it before contract formation.

NOTE: Silence can amount to misrepresentation here.

Question 3

When is a party “induced” to enter a contract?

Answer 3

If a reasonable person in the claimant’s position would have been influenced by the false statement to enter the contract

Courts will generally not consider statements of “mere puff” to be misrepresentations (e.g., advertising speak)

Question 4

Three types of Misrepresentation

Answer 4

Fraudulent Misrepresentation

Negligent Misrepresentation

Innocent Misrepresentation

Question 5

Requirements for Fraudulent Misrepresentation

Answer 5

The false statement was made:
(1) Knowingly,
(2) Recklessly, or
(3) Without belief in it’s truth

Question 6

Defense for Negligent Misrepresentation

Question 7

Remedies for Misrepresentation

Answer 7

The contract is VOIDABLE
- Can rescind it
- Can affirm it and claim losses resulting from misrepresentation.

Question 8

What are the bars to rescinding a contract?

Answer 8

Affirmation
Lapse of time
Impossibility of restitution
Bona fide 3P acquires rights

Question 9

Can you get damages in lieu of recission?

Answer 9

Only for negligent and innocent misrepresentations